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37
InMode
Ltd
(NASDAQ:
INMD)
US
Case
Study,
Jan
2024
By:
Naresh
G
2
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3
Table
of
Content
03
Table
of
Contents
Circle
of
Competence
Economic
Moat
&
Competitors
Financials
Potential
Risks
Management
Valuation
&
ROI
01
02
03
04
05
06
4
01
Circle
of
Competence
Ø
What
Ø
Where
Ø
Type
Ø
Future
Plan
5
§
Leading
global
provider
of
innovative,
energy-based
,
minimally
invasive
surgical
medical
treatment
technologies.
a.
Designs
b.
Develops
c.
Manufacture
d.
Commercialize
1.
§
Utilize
medically-accepted
radio-frequency
(RF)
energy
technology.
a.
Remodel
adipose
tissue
by
penetrating
deep
into
subdermal
fat
layer.
b.
E.g.
liposuction,
skin
tightening,
etc.
1.
WHAT
5
§
Focus
area
treatment:
•
Face
&
body
contouring
•
Medical
aesthetics
•
Ablative
skin
rejuvenation
treatments
•
Women’s
health
1.
§
10
product
platforms
to
cater
for
several
categories
of
medical
treatments:
a.
Plastic
surgery
b.
Gynecology
(female
health)
c.
Dermatology
(skin)
d.
Otolaryngology
(ENT)
e.
Ophthalmology
(eye)
WHAT
7
Existing
Portfolio
of
Techs
(since
2010)
5
i.
Radio
Frequency
Assisted
Lipolysis,
RFAL
ii.
Deep
Subdermal
Fractional
RF
iii.
Simultaneous
Fat
Destruction
and
Skin
Tightening
iv.
Deep
Heating
Collagen
Remodeling
(for
skin
&
human
natural
openings)
RF
Energy-based
Proprietary
Technologies
9
7
FACETITE
7
11
7
7
13
7
7
15
7
16
7
17
Non-invasive
#1
Hands-free
section
01
Business
Segments
Minimally-invasive
#2
#3
Profitability
–
Revenue
Trend
Supply
Chain
Manufacturing
done
mostly
in
Israel
Rely
primarily
on
outsourced
manufacturing
to
produce
our
devices
while
maintaining
control
over
the
production
process.
2.
Flextronics
(Israel)
Ltd.
3.
(BY)
Medimor
Ltd.
[10.34%
ownership]
1.
Yokneam
,
Israel
(own
facility)
Laser
&
Intense
Pulsed
Light
(IPL)
handpieces
Customers
Outsourcing
allows
INMD
to
carry
lower
inventory
levels
and
maintain
fixed
unit
costs
without
incurring
significant
capital
expenditures
than
would
be
in
place
if
products
were
self-manufactured.
Product
Components:
v
Platform
v
Handpiece/Hands-free
applicator
v
Software
3
rd
party
company
that
manufacture
under
INMD
supervision
WHERE
22
7
Type
of
company
2017
2021
Fast
growth…
With
data
from
6
years
7
Dividend
Company
don’t
have
dividend
policy.
5
1.
1.
Increase
sales
presence
to
target
and
expand
addressable
market
globally.
•
USA,
Canada,
Europe,
Latin
America,
Asia
Pacific.
2.
Continue
to
penetrate
existing
customer
base
further
&
drive
recurring
revenues.
•
When
customer
base
grows,
the
%
of
revenues
attributable
to
consumables
will
increase.
3.
Leverage
existing
technology
to
expand
into
new
minimally
and
non-invasive
applications.
•
Active
R&D
pipeline
focused
on
additional
solutions
targeted
to
traditional
customers.
Future
Plans
&
Growth
Drivers
(1)
5
1.
4.
Expand
customer
base
beyond
traditional
customers.
•
To
address
the
unmet
market
needs
of
a
new
customer
base
5.
Actively
pursue
business
development
opportunities.
•
To
augment
product
&
technology
portfolio
in
our
existing
and
potentially
adjacent
markets.
4.
5.
6.
Expand
intellectual
property
and
patent
portfolio.
•
To
aggressively
defend
against
potential
infringement
by
competitors.
Future
Plans
&
Growth
Drivers
(2)
Economic
Moat
&
Competitors
02
Competitive
Strengths
(1)
1.
Pioneer
of
the
minimally
invasive
aesthetic
solutions
market.
§
Proprietary
technologies
represent
a
paradigm
shift
in
the
minimally
invasive
&
surgical
aesthetic
solutions
market.
2.
Provide
comprehensive
solutions
for
physicians
and
patients.
§
Extensive
product
portfolio
–
10
product
platforms.
§
Post-sales
after
services
that
minimizes
product
downtime
and
associated
lost
revenues
to
physicians.
31
Competitive
Strengths
(2)
3.
Strong
brand
recognition
.
§
Associated
with
product
leadership
,
significant
technological
advances
&
extensive
clinical
data
,
which
has
led
to
stronger
customer
loyalty
.
4.
Broad
regulatory
approvals
supported
by
extensive
clinical
data.
§
29
FDA
clearances
§
Portfolio
of
84
peer-reviewed
publications
§
79
completed
&
13
on-going
3
rd
party
clinical
studies
(Source:
page
24
of
2022
Annual
report)
7
Copyright
7
Network
Effect
7
Network
Effect
Competitive
Strengths
(3)
5.
Strong
management
team
with
a
proven
track
record.
§
Significant
expertise
in
the
medical
aesthetics
industry
ROIC
vs
WACC
(Quantitative)
Return
on
Invested
Capital
(ROIC)
–
Indicates
how
well
the
company
uses
its
money
to
generate
returns.
Weighted
Average
Cost
of
Capital
(WACC)
–
Average
cost
of
raising
the
company’s
finances
(made
up
of
debt
or
equity)
Presence
of
decent
economic
moat
since
2019
7
Ref:
Simply.WallSt
INMD’s
competitors
7
Ref:
Simply.WallSt
INMD’s
competitors
Most
relevant:
NuVasive
●
XLIF
is
a
minimally
invasive
spinal
surgery
technique
that
uses
lateral
access
to
the
spine.
●
●
MAS
is
a
minimally
invasive
spinal
surgery
technique
that
uses
muscle-sparing
approaches.
Not
directly
related
to
products
that
INMD
sells
Management
03
5
CEO
Background
Former
roles:
•
C
o-founder
and
CEO
of
Syneron
Medical
Ltd.
•
CEO
of
Home
Skinovations
Ltd
Education
background:
•
B.S.
In
Engineering
(Tel
Aviv
University)
•
MBA
(Pace
University,
NY)
Board
of
Directors:
•
Easy-Lap
Ltd,
O.B.-Tools
Ltd.
•
Easy
Notes
Ltd.
•
Escape
Rescue
Systems
Ltd.
•
Himalaya
Family
Office
Advising
Ltd.
•
M.N.
Business
Strategy
Ltd.
•
New
Forest
Wood
Products
(2012)
Ltd.
•
Peri-Ness
Technologies
Ltd.
•
Polimer
Logistics
Ltd
•
Silk’n
Cure
Ltd.
•
SipNose
Ltd.
•
Urifer
Ltd.
•
Compensation
Scheme
(1)
Salary
includes
Covered
Executives’
gross
salary
plus
payment
of
social
benefits
made
by
us
on
behalf
of
such
Covered
Executive.
Such
benefits
may
include,
to
the
extent
applicable
to
the
Covered
Executive,
payments,
pension,
car
expenses,
medical
and
other
insurances,
401K
company
contribution,
payments
for
social
security
and
tax
gross
up
payments,
vacation
and
other
benefits
consistent
with
our
policies.
(2)
(2)
Represents
the
share-based
compensation
expenses
recorded
in
our
consolidated
financial
statements
for
the
year
ended
December
31,
2022,
based
on
the
Share-based
Compensation
fair
value,
calculated
in
accordance
with
accounting
guidance
for
share
based
compensation.
For
a
discussion
of
the
assumptions
used
in
reaching
this
valuation,
see
Note
13
to
our
consolidated
financial
statements
There
is
no
disclosure
of
CEO’s
compensation
scheme?
https://wallmine.com/nasdaq/inmd/officer/2219391/moshe-mizrahy
https://wallmine.com/nasdaq/inmd/officer/2219391/moshe-mizrahy
Share
Ownership
(Insider)
No
info
on
insider
ownership
shown
in
Gurufocus.
From
annual
report:
(30
Sept
2023)
INMD
CEO
Share
Ownership
(Institutional)
(30
Sept
2023)
Institutional
Ownership
4
Financials
04
Ø
Profitability
Ø
Cash
Flow
Ø
ROE
&
ROA
Ø
Debt
Ø
Balance
Sheet
7
Revenue
in
upward
trend
Gross
Profit
in
upward
trend
Revenue
Gross
Profit
7
>
40%
since
2017
Industry:
Ø
Medical
Devices
&
Instruments
Sector:
Ø
Healthcare
7
0.13
1.96
EPS
in
Uptrend
2021:
73%
increase
YoY.
•
Strong
demand
for
minimally
invasive
platforms.
•
Gained
traction
in
international
markets
,
with
international
revenues
growing
112%
YoY
Net
Income
in
upward
trend
Net
Income
=
Total
Revenue
–
Total
Expenses
Net
Income
2022:
paid
~$39.9
million
in
taxes,
causing
a
slight
drop
7
Industry:
Ø
Medical
Devices
&
Instruments
Sector:
Ø
Healthcare
Net
Margin
Uptrend
2021:
Due
to
Revenue
increased
by
73%
YoY
Uptrend
50
>
7%
since
2017
>15%
since
2017
51
D/E
<
0.5
Healthy
financial
parameters
•
Current
Ratio
>
1
•
Quick
Ratio
>
1
52
53
Risk
Analysis
05
Ø
S.C.A.N.
Analysis
Ø
Potential
Risks
S.C.A.N.
Analysis
S
pecialized
labour
required?
•
Depends
primarily
on
outsourcing
facilities
but
they
have
good
relationship
C
ompetition
manageable?
•
Competition
are
not
directly
in
the
same
field
May
not
be
affected.
A
ble
to
raise
prices?
•
Brand
awareness
is
high.
Might
able
to
do
this
in
future
N
ew
technology
helps?
•
A
R&D
group
of
27
people
are
focussed
on
new
products
&
extension
of
existing
products
56
Potential
Risks
(
As
listed
in
20-F)
1.
Risk
of
market
acceptance
of
the
products.
2.
2.
No
sufficient
demand
for
the
products.
3.
3.
Relies
heavily
on
sales
professionals
to
market
and
sell
products
worldwide.
4.
4.
Failure
to
attract
and
retain
key
personnel
could
adversely
affect
business.
5.
5.
Subcontractors’
operations
are
interrupted
or
if
orders
exceed
manufacturing
capacity.
Valuation
&
ROI
06
Ø
ViA
Calculator
Ø
CFOS
Premium
Option
Valuation
To
Note:
All
investors
should
generally
refer
to
additional
valuations
as
a
prudent
step
to
take
in
the
value
investment
methodology
ROI
(CFOS
Premium)
Using
Strike
Price
=
$22.50;
Last
Premium
=
$1.82,
ROI
=
182/2250
x
100%
=
8.089%
Per
30
day
=
8.089%
/
25days
x
30days
=
9.7%
In
a
nutshell…
60
Summary
Circle
of
Competence
Ø
Company
background.
Ø
Medical
device
company,
based
in
Israel
with
a
plethora
of
aesthetics-related
technology/wellness
solutions
Problems
/
Potential
Risks
Ø
Risk
of
market
acceptance
Ø
No
sufficient
demand
for
the
products
Ø
Relying
on
outsourced
manufacturers
Solutions
/
Future
Plan
Ø
Increase
sales
presence
Ø
Expand
into
new
product
applications
(R&D)
Ø
Pursue
business
development
opportunities
Ø
Business
segments:
Ø
Minimally-invasive
Ø
Hands-free
Ø
Non-invasive
62
Ø
Competitive
strengths:
Ø
Pioneer
of
the
minimally
invasive
aesthetic
solutions
market
Ø
Strong
brand
recognition
Ø
Broad
regulatory
approvals
7
Thanks!
By:
Naresh
G,
Jan
2024
Value
Investing
Academy
We
Care
to
Make
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